The Fundamentals of Business Funding

All attempts to obtain any sort of funding must begin with a sound business plan. Why does one place so much significance in a mere business plan? If you are able to create and write a convincing business plan then you can effectively increase your chances towards obtaining the necessary funding, which you applied for. This plan has to let the potential investor know that they are putting their money into a venture that will ultimately provide both yourself and your investor with a profit.

There is plenty of willing venture capital investors available despite the fall of many of the dot com companies. However before parting with their cash, lenders and investors will want to see what proof you can provide that customers really do want your services and products and are willing to purchase them at a price, which allows you a reasonable profit. What it boils down to is that the more tangible evidence that you can provide in support of this claim the better off are your chances to obtain your needed funding. This is briefly, what your quick business funding plan must show to those potential financial providers. You want the cash and they want the proof.

Additional factors which may improve your likelihood of obtaining funding are:

o Your business plan must demonstrate that you can earn a good return of profit in as short a period of time as possible.

o Investors are just that – they are looking for ways to increase their capital. With this in mind it is only natural that the higher the return rate which you can offer the investor plus the faster you can achieve this rate then the better chance you have of convincing the investor to back your proposals. Your business plan should aim at a clearly defined and attainable market with sufficient size and the purchasing power to adequately produce a profit.

o The investors often prefer the larger markets, which have a high growth potential. Keep in mind that they try to avoid Cottage Industries and may be looking for a business that can demonstrate that it is sizeable. Your business plan must clearly explain what competitive edge your service or product may have over your rivals.

o In your plan, you should be able to display an ability to actively control all levels of the delivery as well as the quality of the service or final product. They also look upon the experience of your managers and your employees. They like to see that both you and your team possess the necessary skills and the overall experience to ensure that the company becomes a success.

o You must show the investor that you also have a personal investment in your business venture. Their logic is that if you do not have the faith in your own business venture to at least chance a portion of your own money into it then why would you expect other people to place their money in your business. Although “Sweat equity” which is unpaid personal work can be important, the investors and lenders would also like to see an entrepreneur who has a healthy financial stake invested in their business. This is a very important motivational factor.

o When you create your plan be sure that you lay it out in a clear, workable, well-conceived strategy that shows the potential investor that you can get this business up and running. Keep you financial projections realistic and cover both a pessimistic as well as an optimistic scenario.

o Most of the investors and the lenders want to be certain that your “Pounds and pence” set in writing make good sense. This is the reason that your projections are so important to them. Often an entrepreneur will underestimate the total sum of money that will be necessary for their business start-up.

To conclude a realistic and well thought-out business plan will make or break any investment proposal. If you can get this right then you have every chance of achieving the right investment for your business.


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